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Purpose The purpose of this paper is to obtain new knowledge about the accounting measurement of financial sustainability in local governments, by studying the influence of political factors on the evolution of income statements. Design/methodology/approach This paper analyses income statements of Spanish municipalities from 2006 to 2014, together with mayor profiles and political-institutional factors, using the generalised method of moments system. Findings The income statement represents a useful measure to assess financial sustainability, showing the effect of political factors on three dimensions proposed by IFAC (i.e. service, revenue and debt), such as ideological coincidence, political competition, political ideology, and absolute majority or political fragmentation. Practical implications The findings can be useful for policymakers and accountants responsible for accountability, supervisory bodies, fiscal authorities, voters, users of public services and other stakeholders interested in governmental income statements. Social implications In the Eurozone, the crisis of government finance has made the citizens and the policymakers question the size and volume of public services. Likewise, in countries such as Spain, politicians remain one of the main problems for citizens. These circumstances make it very interesting and timely to study the accounting measurement of financial sustainability and its political explanations. Originality/value The findings provide new empirical evidence about the accounting measurement of financial sustainability in local governments, and they identify political factors that influence the evolution of income statements.

In many countries, the economic crisis brought high volumes of deficit and debt in public entities, which jeopardized the ability of governments to continue providing public services and caused considerable imbalances of economic growth in different regions. In this context, from the recognition of the linkage between economic development and efficiency in public management, previous research indicates that local governments are called to play a key role in promoting sustainable development through environment, economic and social policies based on financial sustainability of the public services. This paper aims to identify influencing factors on the financial sustainability of local governments, as an indicator of their capacity to maintain the delivery of public services over time. Based on a sample of 139 Spanish municipalities with large population for the period 2006-2014, our findings reveal the influence of variables such as the unemployment rate by sector, the dependent population, the immigrant population and the level of education of the population, on the financial sustainability in local governments, providing new useful knowledge to managers, policymakers, researchers and others stakeholders interested in the sustainability of public services.

In recent years, the financial sustainability of local authorities has been recognised as a concept of crucial importance in ensuring that public services may continue to be delivered to future generations. Although many European countries have implemented programmes to enhance their financial sustainability, local authorities are characterised by differing administrative traditions and achieve diverse outcomes in response to the reforms made. Taking a comparative approach, the present study identifies institutional, macroeconomic and microeconomic factors that might influence local authorities’ financial sustainability in England and Spain in order to determine and explain similarities and differences in the drivers and risk factors for financial sustainability in local authorities’ provision of public services. Points for practitioners This article is based on three major theories (agency theory, neo-institutional theory and stakeholder theory) related to the institutional, macroeconomic and microeconomic factors determining financial sustainability and aims to identify these factors comparing different contexts (English and Spanish contexts). This identification of factors that influence municipal financial sustainability could clarify what policymakers might have done to prevent the crisis, what they should do to prevent similar failures in the future and how the long-term provision of public services may be ensured.

In the present context of international public finance crisis, the analysis of government sustainability is considered of vital importance, and a significant element in this is the accounting measurement of intergenerational equity. The aim of this paper is to identify factors that may influence the financial sustainability of local government, doing so through the analysis of 116 local administrations in Spain. Based on Pearson correlation analysis, our main findings show that the annual budget result is a key determinant of local government financial sustainability, and highlight the value of controlling the balance of budget expenditures in preventing future problems of viability for these local authority services.

In recent years, financial sustainability (FS) of public policies has become a key concept in all governmental levels due to the need for ensuring public services delivery for future generations. Prior research has been focused on the financial sustainability in local governments (LGs) although its findings suggested the need to analyze this magnitude in other levels of government because political decisions could be different in each type of public entity. So, FS has also become very relevant in the Regional Government (RGs) context because their public policies affect not only at the regional level but also the local one. Therefore, from a comparative approach, this paper seeks to identify socio-demographic factors which could influence on the financial sustainability, in the Spanish context for both LGs vs. RGS in order to establish public policies to make sustainable public goods and services. Findings demonstrate that differences in influential factors between these two levels of public administration exist: factors such as population size and foreign population could have an effect on the financial sustainability of both governmental levels while the unemployment rate, dependent population, and population density affect differently on LGs and RGs.

In the administrative reforms that countries with emerging and transitional economies are undertaking, the choice of the method to be used for government accounts evaluation is a crucial issue, as the replacement of historical cost by fair value evaluation could affect the success or otherwise of the administrative reforms in these countries. In this article, we analyse the opinions of the National Accounting Standards Setters (NASS) regarding the utility of Fair Value Accounting (FVA) proposed by the International Public Sector Accounting Standards (IPSAS) in the development of administrative reforms in transitional and emerging economies. To achieve this, we perform a survey of the Official National Accounting Standards Setters in these countries, to study the relevance and reliability of financial government reports based on fair value model. Based on the opinions of NASS in sample countries, the findings show that the implementation of fair value in Transitional and Emerging Economies could contribute to administrative reforms, mainly through the enhancement of the usefulness of government financial statements for purposes of transparency and efficiency measurement. In addition, in countries in transition, NASS opinions show that the crucial factor for the usefulness of fair value is the type of assets held by public organizations, but in emerging countries NASS think that the main factor in this respect is the existence of markets where they can be traded. Points for practitioners For public managers in Transitional and Emerging Economies, the findings of this article may be useful. The findings show how the implementation of international accounting standards can contribute to successful administrative reforms, through the improvement of financial transparency and the evaluation of the efficiency of public sector services. In addition, we identify determining factors of the usefulness of financial information for administrative reform purposes in Transitional and Emerging Economies, on an individual basis.